Illinois Municipal pension backs two diverse managers

The $55.1bn system committed to Agent Capital and Red Arts Capital as part of its diverse manager program.

Illinois Municipal Retirement Fund committed to two minority and women-owned private equity managers it sought through an RFP process.

The commitments are an example of public institutions’ desire to find young, diverse managers as a way to expand their reach and exposure across the asset class. Many systems like Illinois Municipal have dedicated programs to expanding diversity and, despite the uncertain economy, continue to look for opportunities with less-established firms.

Illinois Municipal issued a request for proposal in April seeking to work with private equity shops owned by minorities, women or people with disabilities. This resulted in two commitments the $55.1 billion retirement system’s board of trustees announced at its meeting on August 19.

The system made a $20 million commitment to Agent Capital Fund II. Agent Capital was founded in 2016 by Geeta Vemuri, who previously was a managing partner at Baxter Ventures, a managing partner at Baxalta Ventures and a partner at Quaker Partners.
Companies in Agent Capital’s portfolio include Dice Therapeutics, Dragonfly and Orbus Therapeutics.

The system also committed $15 million to Red Arts Capital Opportunity Fund I. Red Arts Capital focuses on lower and mid-market supply chain and logistics companies. The firm was co-founded in 2015 by Nick Antoine, who previously worked at Ariel Investments, and Chad Strader, who previously worked at Woodlawn Partners.

Before launching its first fund, Red Arts Capital completed a $150 million exit from a holding company that owned two trucking logistics companies. This deal was finalized in December.

Illinois Municipal committed $1.8 billion to minority-owned private equity managers as of September 2021, according to a report the system issued last fall. Another public system, New Jersey Department of Investment, launched an emerging managers platform in April, and dedicated $250 million to a separately managed account focused on new and diverse managers.

LPs have increasingly been on the lookout for quality diverse managers to add to their rosters. Many diverse managers also happen to be newer firms, raising their first or second funds, which makes attracting capital even tougher.

Still, with programs like Illinois Municipal, the industry is helping create a small ecosystem of diversity that will likely grow in the future.